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tv   The Pulse  Bloomberg  July 8, 2015 4:00am-6:01am EDT

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>> european leaders give greece until sunday to accept a rescue or face being booted out of the euro. shock move at barclays. antony jenkins is out. a new set of skills are required. chinese stocks plunge again as state intervention fails to stem the rout. george osborne delivers the first conservative budget in 20 years.
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>> you are very welcome to "the pulse." european leaders are speaking openly about the possibility of a grexit and say they now have a detailed plan in place in case "black scenario happens." they have said sunday is the deadline for greece to accept a rescue or risk in booted out of the euro. for mroore we are joined by guy johnson in athens and hans nichols in berlin. he's i nn brussels, excuse me,. let's talk to guy. guy, obviously, these banks are still close. what's it like in greece at the moment? guy: well, people are beginning to wonder when they are going to open. what is interesting is you've got money pooling in certain
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areas of the economy and we need the banking system to restart in order for this money to start moving around the system in the way this meant to do. the question is come next week what kind of money are we talking about? there is deadline come sunday. people are talking openly about a grexit. it is not going to be the flicking of us which. you're not going to see greece switching from the euro to the cracdrachma. we need to get liquidity into the system. companies need to be able to function again. that is absolutely critical. we're looking at a situation clearly that greece did i-55 itself in -- did not expect to find itself in. referendum was meant to give mr. tsipras a strong hand. but mr. draghi says the banks have a few more days, and he seems that greece has got a fee
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more days and the line is heartening out of places like berlin. manus: the german voice very different to the french force. -- voice. let's turn attention to hans. hans, you're in brussels. in terms of greece it's about submitting acceptable proposals. what is the possibility of that happening? we heard a variety of opinions. walk us through the smorgasbord of reaction. hans: we have a pathway to a deal, a timeline. overnight, we have a pessimism that greece will accept proposals that are acceptable. angela merkel seem to voice that went to talks about how difficult it would be for greece to submit proposals that would be accepted. manus: and hans let's just there in mind, we are looking at
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live pictures of moment in strasburg. there's tsipras with his headphones on. the real political protagonists are taking to the stage. where waiting to hear from tsipras. coming armed with rhetoric and no detailed. this seemed to have irked a lot of the political protest protagonist yesterday. hans: the french have been most sympathetic, may be matched by the italians. what we've heard is that there is frustration with the greeks side, that they did not offer specifics. they arrived in brussels without a firm plan. now the deadline is on friday. today do have to submit their formal level to the european stability mechanism - submit their letter. what is he going to do?
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how easy going to tweak the last offer to make it acceptable -- how is he going to tweak the less often? the dtutch prime minister said, "we still hope for a miracle." manus: ok, let's see what tsipras actually tells the parliament today. thank you very much. guy johnson on the ground in and -- in athens. hans nichols and brussels. trevor, great to have you with us. what a morning. china is falling out of bed. tsipras is about to speak to parliament. can the greeks put something on the table in the space of five days that will pull us back from this abyss? trevor: i think they can put something on the table. there is talk about the juncker plan softened here and there.
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something talked about a week or two ago. one of the issues is rebuilding trust. but i think also it is not totally clear that greece's better future is in the euro. manus: i've interviewed a couple of different people that say gold devalued. get on with yourself. look, as a jumping off point, is that a realistic proposition? it is not an export led economy. 33% of business is export to. trevor: the choice is to be in a monetary union where you have no control over interest rates, no ability to devalue. so what is happening is sort of a wage deflation going on to try to make greece competitive. they've had a six-year recession. government debt has gone up substantially. it is not clear to me that there is a clear future for greece in the euro.
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on the other hand, leaving would be a lot of pain up front. i think a two years down the line, they would have devalued and feedback on corsican. -- back on course again. manus: what would a devalued drachma look like? i.o.u.'s going onto the street in greece. trevor: if i want to buy something back from you, i have to give this back to. they will have to use paper money. euros are paper money when it comes down to it. i think it would work. it is not the first time it would've happened. it would be chaotic. some people think that that is kind of what tsipras has been aiming for a long. the referendum less than go back to the europeanleaders and say they do not want to be -- want a deal but we want to stay
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in the euro. manus: we're ready. we have got a detailed plan. ready to rock 'n roll in terms of grexit. donald tusk who was speaking as you and i started, tusk saying that no agreement maybe to the bankruptcy of greece. that is the critical point. the banks are insolvent. if i'm a man sitting in athens streaking a -- breaking a coffee, my money left in banks gets torched. trevor: there is a bit of a risk of that. broadening out from this, the key question is how much should this be worrying the s&p? how much should it worry global stock markets? greece is less than 2% of european gdp. .1% of european stock mark capitalization. big deal for greece. it has huge political
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ramifications for the rest of europe. this is one of these issues were the markets focus on it's very intensity at the moment. in a few weeks time, there will be people on wall street saying where is greece? manus: it is interesting how the ballot test if this morning. we will spend time on china later in the show -- it is interesting to see how the balance has shifted this morning. if you look at investing everybody was moderately overweight euro. are you holding on to that position? i'm all in. trevor: i'm overweight japan and europe most of all. there has a lot of confidence around greece but you look at the money supply and they are exceptionally strong. spain and ireland are strong. there is a possibility to confidence gets affected. i would not rule that out. second half of the year, europe is a strong economy and the mark is looking pretty good. manus: so you are holding firm
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with that. you'll stay with me. here's a look at what else is on our radar this wednesday morning. barclays has announced the surprise departure of chief executive antony jenkins. the bank's definitely chairman said, "after reflecting long and hard on the issue of leadership, it became clear that a new set of scales were required for the period ahead." the search for his replacement is underway. current chairman john a kurland will be -- john mcfarland will become executive chairman. plunging 8.2%, authorities announce fresh measures in an attempt to stem the rout. has seen the shanghai composite slumped by 30% since the june 12 peak. 1300 companies have been halted
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from trading. george osborne will deliver the u.k.'s first conservative budget in 20 years. the chancellor whose election campaign played heavily uneconomic prudence and the need for more austerity. with strong his newly granted authority to slash as much 12 billion pounds from welfare costs. at 9:40, we will speak to the ceo, she joyously in the studio getting her take on what british businesses want for george osborne's budget. -- she joins me in the studio. we will ask the same of simon woodruff. of course special coverage of the u.k. budget on bloomberg. we take george osborne speech to the house of commons at 12:30 london time. and we have a special program giving our viewers a take on the
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summer budget. featuring politics, intelligence, and business theme s. where going to cross to alexis tsipras whose taking the floor at strasburg where he is greeted by applause. let's listen in. >> i find myself here only a few days after the resounding verdict of the greek people after a decision was reached to give the floor directly to ask the greek people directly what their views -- for their views and to be an active part of the negotiations affecting the future. a few days after this, we have now been given a mandate to redouble our efforts in order to get a socially just and economically sustainable solution to the greek problem. without repeating the mistakes of the past.
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to a period of never-ending, an impasse of austerity which trapped the accounting -- which trapped the economy in a recessionary vicious cycle. the greatest response by the greek people at the time when there were such precious with the banks closing, with the media terrorizing them into feeling that no meant an end to talks with europe, and and to negotiations with europe. i think that time they stood up and were counted. this is a voice of a democracy. and we have to listen to what they said. this was a courageous choice by
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the greek people and this is not a decision of breaking off negotiation's with europe. it is one of going back, turning to the founding principles of european unification. as the fount of democracy and of solidarity going back to mutual respect and going back to equality. it is a crystal clear message. this is a crystal clear message that europe our common european edifice, the european union will even be democratic or it will have immense difficulties in surviving under the challenging circumstances. these ongoing negotiations between the greek government and its partners -- are to reconfirm
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the dual forms of respecting europe both for the grand rules of the european union and also full respect for the democratic choice of our peoples. my government, i myself personally, and our government -- came to our government five-and-a-half month ago, however the programs have been in force for the last five and a half years. and i fully assume this responsibility forward what has happened in the course based five and a half months. however, i think we must, if we are being sincere, we must recognize that the basic responsibility for the impasse which the greek economy find itself in ahdnd the impasse europe finds itself in they
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extend back five and half years with the implementation of programs which have not helped europe to get out of the crisis it faces. and let me assure the house that apart from the crisis, we will continue with reform undertaking. but let's not forget the fact that for the past five years the greek people have made a tremendous effort for adjustment, a very harsh and difficult process of adjustment, but this is exhausted the patience of the greek people. and this is not just something which has been -- in greece. other countries, we respect the sacrifices they have made in the difficult decisions governments have taken in other countries as well. and many european countries austerity programs have been put into effect. however, nowhere have those programs been so harsh and so
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long-lasting as in greece. it's no exaggeration to say that my country has over the past five years been transformed into an austerity liberatory. however, these experiments all of us have to accept has not been a success over these five years. we have seen a skyrocketing of poverty. unemployment has sorared. social marginalization has interest, as has the public debt. which is now 180% of gdp. and today, the majority of the greek people this is the simple fact we have to face them except, the majority of the greek people feels they have no other choice other than to demand that they be given a way
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out of this impasse. they have expressed this in the most erect democratic way possible and we have to implement that decision. we demand an agreement with our neighbors but one which gives us a sign that we are on a long-lasting basis exiting from the crisis which will demonstrate that there is light at the end of the tunnel and agreements which will bring about the credible and necessary reforms that is clearly necessary but we have to recognize over the past five and half years reforms have been put in place which have been a burden on what pensioners andcan t ake what employers can stand and ordinary citizens. we need a policy of
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redistribution necessary for the middle class, for the working class. and we must have a baissis on which we can proceed. because we have met our partners one which involves credible reforms with an acceptable burden sharing which does not have recessionary effects. we need to ensure the medium-term funding of our country with development and growth programs, because we have to put on the table an agenda for growth because, otherwise there is no way we are going to exit from this crisis. and our prime objective must be to combat unemployment and to encourage entrepreneurship. our proposal contains the demand
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for the admitted undertaking that we will see january dialogue, -- a genuine dialogue and negotiation in order to get an answer to sustainability of public debt. we cannot have taboo subjects. we must find solutions to the real problems, however difficult the solutions may be in practice. our proposal has been submitted as one which meets those requirements. it has been put to the euro group at the summit we had yesterday of the eurozone. and today we are working with the support -- in the next two or three days, we have undertaken to bring forth concrete proposals in detail. i'm confident in the next few days we will be able to meet the obligations of this crucial time in the best interest of greece and also for the eurozone. and can i say this is not just the economic it is also in the
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best interest geopolitical he of the european union. let me be crystal clear in this area. the proposals by the greek government for the findings of its applications -- its obligations and restructuring of its debt are not designed to provide an extra burden for european taxpayers. the money set have been afforded to greece never got down never trickle down to the greek people. this was money which was given in order to save the greek and european banks, but they never trickle down to the ordinary greek men and women. and in addition, starting in august of 2014 we have got to disperse a tranche under the
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bailout which continues until the 30th of june. repayments of 7.2 billion. and it was not our government which was in power from august of 2014 until 2015. the fact is the program has not been implanted. the program was not implemented then. not because at the time there -- the ideological circumstances we had. it was because the program then and the program now did not have social acceptance. it is not sufficient for it to be right. it has got to be workable. it has got to have the public support and acceptance. ladies and gentlemen, over the same period, greece has been
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involved in negotiations because of that 7.2 billion and disbursements. we also had a duty we are under an obligation to repay to the same institutions which we provided the financer. repayments of 17.5 billion euro s. and that was money which was taken from the resources of the greek people. esteemed members, despite all i have said, i'm not one of those politicians who claim that -- those responsible for the woes of greece are wicked foreigners. greece has gone to the verge of bankruptcy because for many years the government of greece have been creating -- and
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strengthened and enhanced correction. they have created and nurtured of nexus between political and economic power. they have allowed tax evasion to run riot. and this is not right. in accordance with credit suisse 10% of grfeeeks have 56% of the national wealth. and 10% at a time of austerity, they have not borne their share of the pressure. this is major injustice. and the bailout programs have not made things better.
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they have made things worse. they were supposed to bring about reforms, but those reforms have not improved the tax collecting mechanisms which collapsed under the excessive zeal of enlightened and terrified national officials. none of the reforms of health. -- have helped. when it comes to the nexus between the political establishment, the oligarchs and the banks. none of othe reforms -- of the reforms have improved the efficiency of the mechanisms of state, which has become inured to working in the selfish interests, elston interests rather than the common good -- vested interest rather than the common good. these proposals have now been put on the table. our proposals, they are based on
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genuine reforms whose purpose is to change the face of greece. these are reforms which previous governments and the old political regime did not want to put in place. they did not want these changes to take place in greece. that was not the purpose of the bailout. effectively tackling the oligarchy and the curtail of vested interests, we have now got to turn the page of that the way that national finances and unemployment and the labor market are covered, we must now get a handle on developments in those two areas. we must he able to implement the priorities of our government and get traction on those difficulties. those priorities are ones that we are going to look at with our partners. today, we come with a strong
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mandate from the greek people and we are determined not to ha ve a clash with europe but to tackle head-on the -- and change the mindset which has taken us and taken the eurozone down. ladies and gentlemen, europe finds itself at a crucial crossroads. what we now call the greek crisis is only a manifestation of the inability of the eurozone to find a lasting solution to the self-fueling debt crisis and what we now need is a european -- and this is not exclusively a greek problem, this is a european problem. and european problems require european solutions.
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european history is a history of conflict, but conflict leading to compromise. and it's also a history of convergence. it is a history of unity and not divisions. and this is why we talk about a united europe and that it's not a divided europe. at this time, we are told to produce a productive and fair compromise which will avoid a break off in negotiations. and this is in line with the traditions of european union. all of us are taken the measure of the situation. i believe that together we can rise to this.considerable challenge . thank you very much.
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[applause] manus: alexis tsipras addressing his, well his political peers in strasberg. he's talking about the need for a united europe, a fair compromise. it is interesting that tsipras referred to greece in the past five years having been treated as an austerity laboratory. they need a way forward. there needs to be medium-term funding. the objective is to encourage entrepreneurship. he also refers to the need for talks on debt relief to be on that table. he made it very clear about this nexus between three key groups within greece the politics, the oligarchs, and the banks. this nexus that he referred to. and he talked about tax evasion is something which has run riot in the country.
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so, very much addressing those big issues which are front and center and everybody's critique of greece, but very much saying that it was time for discussion. i think interesting use a phrase was the medium-term plan. he did use the word terrorism at the start of his speech but that was about how the media had inflicted a terrorism view on the greece people of but the crystal message was about democracy surviving and europe needs to reflect on that or face major difficulties. alexis tsipras as we count down to what looks like the final deadline set by the europeans where ms. merkel says she is not that helpful. put a plan together and come pu up with a program to lend money to the banks. george osborne will deliver the uk's first conservative budget in 20 years. the chancellor, whose election
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campaign played heavily and economic prudence and the need for more are scared he will draw on his nuclear granted authority to press ahead to slash a further 12 billion pounds from welfare costs. china's index has seen its biggest intrdaday fall since 2007. authorities have announced fresh measures and a step to -- an attempt to stem the rout. the shanghai composite has slumped 30%. barclays has announced a surprise depression of chief executive antony jenkins. the bank's deputy chairman said that after reflecting long and hard on the issue of leadership, it had become clear a new set of skills of be required for the period ahead. the search for jenkins replacement is underway. in the meantime, john will become executive chairman. -- john mcfarland will become
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executive chairman. let's go to sandy chen. you what do you make of this? it was a shock to us. was it a shot to? sandy: when john mcfarland was appointed chair, speculation began the jenkins would eventually leave. so the timing was not unexpected, but actually the event was. manus: which brings me to the next point. new leadership is required to accelerate the pace of the execution goin forwardg. and yet he goes on to say in that same statement that there is no radical shakeup and strategy. that is a misnomer. sandy: it is a just and because the statement that was put out this morning by barclays was unusually clear. in terms of saying that the outgoing ceo is really leaving because they need a new set of skills. and mcfarland coming in said
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look, we have got to focus harder on revenues, costs, and just doing things better and more quickly. manus: the investment banker, left them holding the puppy. behavior at barclays onto the 10 ye -- tenure of was anything but good. retail banking does not work. what works? sandy: what i think will work for barclays is -- aggressive pruning of the banks. my guess is the board thought the ceo had antony jenkins could not get it done. manus: he announced 7000 job losses. they languisth at 8 in fixed income commodities.
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where are the business areas that will be first in the line of fire? if you're in lancashire number -- languishing at number 8. sandy: the focus is what can generate revenue growth? where can they cut costs and what is capital efficient for the bank? all of those things actually read to pressure on the investment bank in particular. manus: it is a human side as well. you're sitting at a banquet year just got a new coe. you went to a radical -- a new ceo. why would you stay? if i was sitting in barclays on the trading floor, i would be bringing a headhunter. sandy: i do not think there has been much pity for investment bankers throughout recent history. manus: it is not about pity. it's actually about -- there are two sides to the coins.
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sandy: i think that the investment bank, there is a part of the investment bank operations that can generate good revenues with limited capital impact. manus: what are they? sandy: there are some parts of the fixed income business, the equity business provided. again, it is all these big blocks. provided chunks within those blocks are configured properly they can deliver a decent return. manus: -- credit card and personal consumer banking they stay, they grow. they are the good pieces, the more productive pieces in thi jigsaws. sandy: yes. since about 1993, i long had a decent opinion of the u.k. retail bank. and the barclays learned their lesson in terms of how to do
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proper retail banking a long time ago. and they have never forgotten that. and so, the u.k. bank i think is a very strong asset, a very strong franchise within the barclays group. manus: i know you change your rating. what is the new rating? sandy: after at least four years of being a seller, i have upgraded to a hold. manus: radical move. great to get your opinion on that. sandy chen on the banks story of barclays. coming up later, we speak to the barclays chairman john mcfarland about the departure of the ceo. what other questions? what are the answers that mcfarland is going to answer. what are the skills of the new ceo he wants to get and what exactly is the way forward fo barclaysr? investment bank or retail bank or still have both? george osborne will deliver his
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first conservative budget almost 20 years. let's cross over to anna edwards standing by in westchester. anna? anna: good morning. yes, the first purely conservative budget in nearly 20 years as you rightly say. so, let's get the thoughts from the iea. mark little one joins us. great to see you. a lot of debate about how much cutting the government should do in terms of it austerity. they said previously they want a set list on the budget deficit and that implies some big cuts. you do not think those cuts will go far enough. >> looking back to the last parliament, between 2010 and 2015, his aim was to balance the books entirely. he only got halfway there. so there is a danger, a tendency to move on and believe the
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budget deficit has been salt or is going to be solved in the next year or two. i think we facing deep cuts in public spending. to get public finances back in balance. we are expecting him to announce 12 billion pounds worth of welfare cuts. but rumor has he will spread that over 20 years, not two. i would employ the chancellor, get the pain out of the way fast. if there is a single budget that is economically sensible but politically unpopular it is that budget two month after you have one a general election. anna: in terms of the pure economics a number of economists are starting to ask questions about just how much austerity the u.k. economy can stand. pwc has said that to meet that target of a surplus in three years, you'll have to have cuts twice as big as the cuts we have seen in the last government. do you think the u.k. economy
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can withstand that much? john: it would be good for the british economy. these numbers are huge when you talk about 12 billion and welfare cuts. bearing in mind in realtors inflation adjusted, the government was only cutting by 1% per annum. these are cuts that companies can easily make. we should not overstate the scale of spending restriction tactics. it has been on a slow downward curve. the good news for george osborne and the wider economy is the tax receipts are picking up. we are seeing real rage growth. -- wage growth. that helps balance the budget. the problem is this, of course -- even when you get to that magic point when the government across the road is no longer living beyond the means of taxpayers, we sti have a lot of
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liabilities, a colossal national debtll. it is very important balancing the books in three years time is not seen as mission accomplished. that should be the normal regular state of affairs. anna: that is why the government has said they want to legislate -- the aim of all governments. you mentioned well for spending. 40% of the welfare bill is off-limits because this government has said they are not going to target pensioners with any of this. pensioners take up 40% of the welfare bill. do think that is right? do think they should back away from that stance? mark: it is not likely that they well, but politically the conservative party has decided that affluent pensioners need to be protected. they are not going to feel the pain. i think that is bad economics. if you go back a generation or two it was the case that one to have retired and you are in this 60's or 70's, more likely than not you are struggling to get by. that is not the case anymore. we have quite a group of
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affluent pensioners. younger people struggle to understand why affluent pensioners still qualify for free bus passes, fuel allows and have their state pension triple locked. it goes up by 2%. all wage growth, or price growth, whichever is the highest. that might be good politics, but it is not good economics. anna: you heard about that in "the telegraph." did you get hate mail? i would've thought the elder demographic would have something to say about that. briefly, we talked a lot about the risk of grexit. all that on the horizon. is it possible to incentivize businesses to invest in the long-term spending on productivity or spending on wages with all of those worries out there? mark: of course those are worries which are more or less beyond george osborne's
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reach. to some degree, i'm afraid the british government needs to rely on the power of prayer as far as greece is concerns and make sure it gets its own house in order. for the five years the u.k. has become a better place to do business. i hope the chancellor of the exchequer doubles down on those advances when we hear from him. anna: thank you for joining us. back to you. manus: well done. you're having a great time down there. did very well. anna edwards covering the budget. we will have special coverage on bloomberg. i will take us into george osborne's speech at 12:30 london time. jon ferro will be back at 4:00 p.m. giving you the need market and visions -- and business take on the summer budget. political analysis. bloomberg intelligence and the business teams join us.
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what to retailers really want to hear from george osborne as he delivers his budget this afternoon? we speak to one ceo. of anne summers coming up after the break. ♪
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manus: you are very welcome back to "the pulse" live from bloomberg european headquarters. george osborne will deliver the
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first budget by tory majority in almost 20 years. joining us is jacqueline gold of ann summers. great to have you with us. the last time you were here with guy, you said look, i want to see the system of rates of taxation for businesses on the high street change. today's his chance. what do you want from him that would convince you to say, they are treating my business properly? in addition, because i know they have been generous with the corporate tax. jacqueline: i want that to continue. certainly business rates. i would like to hear george osborne reaffirmed his commitment to reforming business rates. that is really important. and i would just like to hear that again. obviously, i would like to see the deficit continue to come down, because that will ensure a stronger economy. i would like a lip or -- a big more done for women.
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they have done some great things for working women already. and they also talked about extending free childcare. i would like to see more of that so that we can get talented women back in the workplace and contributed to the economy. manus: let's break it down. we have got deficit reduction. and the risk is that any cuts to o hard, as a lady running a business on the u.k. high street, how might that impact your business? that is about putting money away from tax credits and from families. jacqueline: yes. this was always going to be difficult. we know after a victory, it is inevitable this is going to follow. and the money has got to come from somewhere. what i am encouraged by is i'm encouraged by the increase in personal allowances to 12,500 which i think will be brilliant. i'm also encouraged by the threshold move to 50,000 to
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middle earners. both of which will help retailers. we want people to have more money in their pockets, more money to spend in our stores. manus: five years. we make a deal about the technology hub in the city of london. silicon roundabout. is this a government that you think should push entrepreneur ship. you b uiuilt a business. is this a government which needs to encourage entrepreneurship? the way to build entrepreneur ship, george, do this. jacqueline: i think they are doing that. this is a government that is always about aspiration, which is why i am their supportive of the tories. when we talk about the middle earners, i feel they have been neglected. people need to know that it pays to work. we want people to feel that they can go out there and start a
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distance and be supported. tha tories are already doing that for women. of course there is always more that can be done. i think at the moment, just supporting businesses in terms of the apprenticeship's they are doing. not increasing vat. that is another one that is very important. i think all of these things are moving in that right direction. manus: we dealt with deficit reduction. we also part -- we also talked about bringing more women into the workforce. your business employs a lot of women. is that getting easier? are you finding it easy to retain women once they join you and they decide to leave the business? jacqueline: this really is a big issue for me because i have been in business 35 years and we are still having to -- the same conversation which is disappointing.
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i think it is just as much the responsibility of employers as is it the government. we cannot put all of that on the government. we need to change as employers in our attitudes. and value women in the workplace. obviously, i do that in my own business. it is the heart of my philosophy, but we need to do that generally because there is so much missed talent. i contribute 1.5 billion to the economy in my career. there are some of the other talented women -- manus: kick those boys out of number 10. move boys. we have got more to contribute. there is this banner that he flies around northern -- you run businesses up-and-down the high street. when you hear the discussion about moving business to the regions north, manchester, will it have an impact? jacqueline: i think it is a really positive thing.
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obviously, it is about engagement. that's important. we have got to make everybody feel included. it is not just about london and we should be spreading the wealth and success and investment around the country. manus: how's the business? jacqueline: business is good. we are evidence good evidence of how things are moving forward. retail is up 7%. we have got a great outlook. we have got a 4.5 million pound profit swing. i could not be happier. manus: thank you for coming into us today. christmas. i hope you get what you want. the ceo of ann summers. up next why greece's grappling with capital controls has proved a boost for another business. ♪
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manus: in greece long queues at cash listings are getting tedious. some are using bitcoin. but it is getting challenging as some are finding out.
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>> a year ago we decided to launch the first greek discount exchange. the numbers have jumped off the roof. there is no comparison with the beginning. at the beginning we had 5, 6 10 clients per day. at the moment, we have 150 clients per day depositing and buying their first bitcoin. we see a lot of people that they use bitcoin as value. for a lot of greeks represents an opportunity to offset the risk they might incur of a bailing of the banks come impose from the european central bank. the bitcoin atm is something that has been introduced in the greek market for weeks ago. it is inside a bookstore in a neighborhood in greece. felix: i travel around the world
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for one year only using bitcoin. no credit cards, no bank account, just bitcoin. with bitcoin there is no cash restrictions. you can access your money anytime. since 2012, there was a restaurant in athens that excepts bitcoin. -- accepts bitcoin. >> i started using bitcoin in 2012. from 2012 i have about four or five customers pay with bit. i do like it. i think people are starting to use bitcoin because of the capital controls. and because because the people now do not access to money in the banks. manus: times of crisis. interesting were people turn to.
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you can join me on twitter. i'm @manuscranny. as alexis tsipras address the parliament in brussels. ♪
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manus: tsipras responds. the greek prime minister says its country has become a laboratory experiment and austerity. barclays ceo is out. john mcfarlane shakes up the board room after three months on the job. chinese stocks plunge. intervention fails to stem the right. the first conservative budget in
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almost 20 years. good morning to our viewers in europe. good evening to those in asia. we are live from bloomberg's headquarters in london. we will be speaking to john mcfarlane about the shock departure of the ceo antony jenkins. the greek prime minister has said his country has become a laboratory experiment and austerity -- experiment in austerity. tsipras also said it does not signal an and to negotiations -- and end to negotiations with europe. >> we have to listen to what
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they said. this was a courageous choice by the greek people. this is not. -- this is not a decision of breaking off negotiations with europe. manus: european leaders speak about the possibility of g rexit. for more, we are joined by guy johnson. hansson nichols is in brussels. let's get to you, guy, on the ground. he talked about the tax invaders and the banks. guy: he was pointing at the
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problems in greece and the creditors. tsipras has a habit of coming out of summits and making harsh statements about the groups within the summit. he sounded softer. he talked about the desire to remain within the euro. he said the referendum was not about that. he talked about greeks being a laboratory for austerity. he is not happy and does not like the deal in front of him. he wants a just deal. that hints that he does not want more austerity. that is where the gap lies. we have seen with the ims has said and heard with a set about debt restructuring. he feels a debt deal needs to be included in a package for greece. the fact he did not come out and
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deliver a firebrand speech is more positive than we give it credit for. manus: the situation with the greek banks, this is the real issue on the ground. we are in this state of limbo until sunday. if they were in a program, the ecb could do something. is that the right deadline? guy: it probably is. mario draghi was talking about the fact the banks have until the end of the week. the banks need to open. the economy is not functioning. it is more important the companies cannot access the monetary system and they cannot operate.
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we need the banks to open. the question is, how do they open? the banks remain front and center. until they open, it is hard to see progress for greece to get back on its feet. if they do not open with euros, that is a different story. how do they get liquidity? manus: thank you. let's cross over the hans. we talk about the proposals. tsipras says they have already submitted a proposal. he used the term medium-term funds for development. something short-term to get us through. there are other northern european voices steadfast, a full deal or no deal.
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hnans: there would be one full package with medium-term goals and reforms. short-term, bridge financing would be a way to keep greece solvent through the summer. it would be part of one inclusive package through parliament and athens. coming out of those meetings angela merkel did not sound optimistic. she was not positive. her concern is greece will not submit a list of reforms that passes muster. angela: i am not optimistic. we mean again on sunday, first in the format use have seen today and again on the format
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of 28. it is very serious. hans: we heard from the austrian central banker who confirmed there would be a discussion on an ecb phone call later today. we are looking to see what the ecb does. greece has to submit their letter and ask for new bailouts. friday they have to, up with proposals. -- friday they have to come up with proposals. they will be scored and it will be seen if they meet their goals. then you will have a euro leaders summit. it is important because if you do not have a deal on sunday you will not hear about financial assistance or bridge loans. you will hear about humanitarian
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aid. here is what was said about the need for humanitarian aid after sunday. >> we cannot exclude a black scenario. no agreement until sunday. in means we need to discuss the consequences for the whole european union, not only the eurozone. hans: one quick note on tsipras' speech. german members were quite harsh and blistering. everyone wants details and specifics. they have been met with disappointment. can that change by friday? manus: it is going to come down to the ecb the level of people in this program.
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greece is ready for the worst. that is what they are telling us. thank you very much, gentlemen. guy johnson in greece and hans nichols in brussels. philippe joins me now. i think nigel farage is speaking at the moment, we have seemed to move on from that. there are a variety of responses to tsipras' speech. let's get into this conversation with philippe. we have heard from alexis tsipras. angela merkel is not optimistic. in the review, suppress -- in the review, tsipras talks about the need to break up the relationship and get tax payments on schedule.
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they want details. philippe: he was elected on that platform, to end austerity. he has been there for five months and we are waiting for the proposals. we have to strike a deal in a couple of days. there have been six months to have a deal. i understand why angela merkel is not optimistic. the clock is ticking. if there is no deal by sunday greece will default. if greece defaults, ecb will not be able to provide liquidity to the banking sector and it will collapse. manus: that grexit scenario, let's deal with the domestic impact. what do you think the newly discounted drachma would be
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valued at? this is in the armageddon scenario. philippe: it is not clear. it will not be an orderly exit. it will be messy where the greek government will have to find solutions to get the financing of the economy started. probably starting with ious. they will need to provide financing to greek companies. manus: that is a bail in. depositors, bondholders. philippe: what will happen if greece has to leave and there is a default of the banking sector the collateral will be kept by the ecb. the reason we have collateral in front of the loans.
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the bailing in of the banking sector will involve other creditors, including shareholders bondholders, and it is something that will need to be dealt with by the greek austerity. at the same time, will they try to wait to get more time to get an agreement? that is tricky. they have to pay ious for civil servants and they need to inverse -- and introduce another currency. they will have time with both currencies. manus: ecb would -- is that the moment you would expect to see action to contain contagion even though markets have not suggested there is substantial contagion at the moment? philippe: the ecb is clear they
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need to fulfill the mandate and provide stability for the euro area. if the eggs it from greece is an issue they will have to react quickly. they are in a good position for that. they can deal with it. they can possibly increase the monthly purchases. to react immediately to avoid a risk of deflation, especially if we have some tensions in some countries like spain or italy. the reaction would be easier than it was three years ago. manus: everyone seems to be consensus upon that. jeffrey says it is opening pandora's box, setting a
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precedent that would make the membership poorest. a weaker europe with the grexit? philippe: we have done the monetary union in a zone that is not -- from the financial or economy standpoint. the reason mario draghi has been able to do his whatever it takes, there has been a decision by european leaders to speed up the integration. it was inconceivable a couple of weeks earlier and then the banking unions were there. if we have these the priority will be to -- the rest of the
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union and increase the credibility of the rest of the union to continue completing the banking union with a single -- to avoid -- in another country. discussing more economic policy maybe a fiscal union, maybe reform the -- manus: does any of this give any strength to cameron's position? philippe: to reform the european union, we will have to accept we have a two speed europe. some countries will not jerome -- will not join the euro. we have to deal with this and build institutions for the your area -- eurarea.
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manus: here is a look at what else is on our radar. barclays has a departure of antony jenkins. michael said after reflecting on the issue, it became clear that a new set of skills was required. in the meantime, john mcfarlane will become chief executive. china's benchmark share index seeneeing its biggest index share. the shanghai composition slump was around 30% since june. state owned businesses have been banned from cutting their stakes in their listed entities. george osborne will deliver the
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first conservative budget in almost 20 years. the need for more austerity will draw on his authority to press ahead with plans to slash a further 12 billion pounds from coffers. a special u.k. budget conference here. at 4:00 p.m., a special program giving our viewers a take on the summer budget featuring talent across bloomberg. let's get more on what is going on with the china stock market. you have the facts and the figures. mark: every day i am blown away by the stats. the shanghai comp laws it -- the shanghai composite fell.
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we are now down 32% from the june 12 high. this is a one year chart. that is $1.75 trillion. that is what that 32% equates to. 369 stocks were unchanged. 604 companies fell by 9.9% or more. that is just over 1100. at least 1331 companies were halted on the exchanges. 747 fell by the 10% daily limit. sellers were locked out of 73% of the chinese market. what happens when you are locked out of a large proportion of the market -- you will sell any and
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you can get your hands on. that is what is going on. the selloffs are widespread and spilling beyond china. further measures were announced today. they have seemingly done nothing. the china financial futures exchange ranged from the index futures. the central banks says that will provide liquidity to the stock market. china's security financer said it will buy more shares of smaller companies. the government ordered firms not to cut holdings in their companies. the effect is clear. look at this. the benchmark in hong kong, i told you yesterday it has been a bear market. it has fallen by 10.5% in four days. today's 6% drop was the most
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since november 2008. look at the emerging markets index. similar performance. 7% lower in six days. down by 3.2%. the spillover is not just focused on equity bosses. i want to show you the commodity markets. i have not got time. manus: thank you. oil, copper was trading at levels we haven't seen since 2009. it goes beyond equity markets. let's take our attentions to nick who joins us from beijing. these suspensions what does it signal? is it desperation by the chinese? nick: if you look at the
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government's track record, they promised to give the market a more decisive role. they seem to be re-trenching after some reforms to do that. governments have been known to intervene at times of financial crisis. the u.s. did so with the troubled asset relief program during the u.s. crisis. a lot of these moves look like moves aimed at sentiment. calming down the market. if you look at the particulars of the moves they are limited in their scope. the move that mark mentioned china ordering state owned companies not to reduce stakes you would not expect a state owned company to reduce its stake in a listed unit. a lot of these moves are aimed at bolstering sentiment and quelling panic and not a
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significant reversal of the government's push to have the market play a decisive role in the economy. manus: what is the end game? we have had requirement drops legal buffers put in place. is it to support the retail investor or to avoid a meltdown? :nick: there are signs the selloff is leaching into other areas of the economy. prices of commodity, soybean, even and's are down today. it is spreading. we have seen sales of vehicles people are buying fewer cars. it extends into the rest of the economy and you could see greater reaction by the government. how low will they market go? it is up from the start of the
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year. some predictions that it could fall another 30%. we will watch that in the days to come to see whether the government decides to draw a line or fulfills its promise to let the market play the decisive rolling keep going down. manus: thank you for that roundup. the u.k. counselor george will deliver his larger. in a few hours, anna edwards is at westminster. you call it a gas, anna? anna: that is one way of putting it. george osborne about to deliver his budget. a man who knows a thing or two about a budget, i wonder if you could set out what you hope to see from a chancellor delivering a budget with the headwinds we
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face. >> that is the purpose of having a july budget. some of the difficult decisions, we better get on with it. the economy is strong enough to be ready to get rid of this deficit, heading towards a surplus, where we can get the economy going strongly. also, doing what we can to be pro-business and pro-enterprise improving the conditions. anna: should the budget be about making choices that are politically unpopular? this would be the budget to do it. >> it is. today's politics is dominated by public relations and mass media.
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some democracies are incapable of making these decisions. the coalition government has been successful compared with other western democracies. people decided they had better stick with us. here is george's opportunity. he seems determined to take it. anna: some say we should drop the income tax down from 45%. >> if you do that, the debate about the budget will be dominated by the cliches about it is helping the super rich and is at the expense of the poor. it would be better to have a more sensible debate and hold off from doing that. he is going to start raising the
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threshold and do something about tax credits. at the moment people charge a higher rate of tax because they have gotten so rich. they give some of that money back again. this is a crackpot arrangement. you cannot do it all straight away. it is time to get the tax credit system back. anna: they have the british referendum coming up. >> these discussions have taken up a little time given everyone the chance to prepare. it is going to be resolved.
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the best thing we can do to get people to invest in this country is to maintain and improve the level of confidence people have that this is a sensible place to invest because it is being run on sensible macroeconomic policy grounds. that is the other thing george is determined to do. this should be a pro-business budget. england understands that is what is required. anna: i read that you were suggesting the u.k. should join the euro. >> the british have gotten neurotic about the single currency. that is the problem with electing the wrong people.
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how was the euro run on the basis of the roles that were set out? we would not have this financial crisis. had britain joined and stuck with criteria, we would not have the worst financial crisis since the war. once they resolved the greek tragedy-comedy, fiscal discipline and make them stick. the disaster came when our successors did not follow all of the rules and they banned the finance ministers and the clause , never having a deficit of more than 3% in a year abandoned first by germany. anna: they should never have
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allowed things. once it join, it should have modern competitive economies to hold their own with each other. if greece had not been i come earlier. it has already had some of its debt rescheduled by some other eurozone members. it probably was not until the new, ridiculous government was elected six months ago. the previous government was not good. the greek electorate got seduced by people who said there is free money. anna: great to see you.
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a man who knows a thing or two about putting together a budget. we are waiting for george's budget. manus: we have special coverage for what is chancellor osborne's first budget with a full majority in the house. we bring everything that is good about bloomberg together. let's get you up to speed with some of the other headlines. in a statement, michael raikes said after reflecting long and hard on the issue of group
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leadership, it became clear that a new set of skills were required. a search for jenkins' replacement is underway. john mcfarland will become executive chairman. alexis tsipras calls the -- calls greece an experiment in austerity. china's benchmark share index has seen its biggest fall since 2007, plunging as much as 8.2%. the shanghai composite slump is around 30%. george osborne will deliver his u.k. first conservative budget
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and almost 20 years. the chancellor, whose election campaign played heavily on economic prudence and the need for more austerity will drawn his newly granted authority to prep ahead with plans to slash a further 12 billion pounds from coffers. the u.k. has a productivity problem. gdp work is flatlining. it is lower now than it was in 2007. one industry bucking the trend is manufacturing. we visited the manufacturing sector in coventry. >> you refer to it as a productivity issue and i refer to it as a productivity opportunity.
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we are part of the time manufacturing. for every pound the government invests in the cap a poll have generated 15 pounds. we have a situation where we have high levels of employment. we do not have the same levels of the rest of europe. if the u.k. invested to the same level and robotics as the rest of europe, that would give us something like 22% improvement
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in productivity. that is great opportunity. rather than invest in robots, we need to look at next generation what i refer to as intelligent automation. linking the robotics and lasers of the robot is able to multi task rather than do a single job. it gives us a leapfrog opportunity. i would like to see more investment and available for industrial automation into manufacturing, but all the more invest and in skills -- more investment in skills. we need to train engineers and technicians in the high volume and manufacturing processes. if we train them in the way we have trained engineers in the past, we will still have a skills -- in five years time.
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i am convinced the future for the u.k. is high volume manufacturing. we need a balanced portfolio. manus: when george osborne speaks, business leaders will the listening. it is a great product. i like it. it makes me feel less guilty. that is a business you found it. this is a tory government. this is george osborne's opportunity to put hard ones across. >> i like the idea. to be a great leader in
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business, you have got to do difficult things. everyone is not going to like you. it is interesting because the conservatives have a majority in a mandate. there is no opposition and there will not be for two or three years. the only opposition is the people at gone -- people egged on by the press. manus: you have run businesses. the reality is, 12 billion pounds is a lot of pain for real people. people who have an impact as a result of today. it is for our longer-term good? >> i had a rocky start to the beginning of my life. i ran out of money on a thursday. i had nothing. i was depressed. i was in the hole. i know what it feels like to be at the bottom. it amazes me -- how do we
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survive in this complex society? if someone does not have an education, it is very hard. get a -- getting kicked on my bum one thing i say about austerity, take away some of the safety not all of it, but some of it, so there is an incentive to get out there and get into work that is what i say. i do not like this new term that has come up, the living wage. it is very emotive. a bottom-line wage. it does not matter what you do. just go and do something. when you are in something, your self-esteem comes back. manus: they grasp the opportunity to get ahead.
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you go up the gum tree and you earn a few quit. more of it disappears in tax. you are an advocate of this government moving on tax bands. you think it would be good. you are happy to pay 50%, good man. you are in favor of reducing to 40%. he said it trickles down. >> i just want to live in a country. for the last three centuries, and has been the leader of the world. to live in a country that is the person of creativity. to live in a country where people want to go and do business, and is the best place taxes are good, the government is prepared to pay its bills
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back, why not? there is less red tape. imagine living in a world like that. it will filter down. if you live in a country excited about their businesses, it filters down. manus: we have creativity here. we are the number one employer in technology. this coalition government they did in gender creativity take risk and entrepreneurship. >> i think we have a socialist government. it is not the traditional place where they look after the tops on the workers.
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i am not going to suffer through this. we need to cut and put it back. they still cap the sparkle. they talk about keeping the sparkle. manus says we just had an interview and it was about being brave. what would be the bravest thing were the most substantial thing he could do to encourage entrepreneurs like you to invest more in businesses in britain
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or could he? >> more of the same. i used to be a labor supporter. i supported gordon brown. at the beginning, he was good. i think george osborne is really hot. he is prepared to take hard knocks. you have to do that, to cut the red tape. we could have a simpler tax system. we have such good computing that nobody is able to cheat on their taxes, not like greece. we can make it easier to employ people. politically incorrect, but to fire people who were at the bottom not pulling their weight. you are not allowed to say it, but i will say it. you should be able to fire
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people and hire people and get the best and reward people. you get a culture like they have in yo! sushi. for the most part there are not thatbaddies in business. for the most part, people are good. manus says: when we need to do? >> he has to go to europe and have a best alternative to a negotiated agreement and be willing to walk away. we get what we deserve. we have got to get behind the government and stop saying they are all crap and all terrible. batna -- best alternative to a
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negotiated agreement. manus: come back and tell us when you choose to invest in business here. coming up on "the pulse," standing in line for euros is not working for some greeks. they are looking for an alternative. could bitcoin be the answer? ♪
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manus: welcome back. barclays has announced the departure of antony jenkins. the deputy chairman said -- a became clear to all of us that a new set of skills were required for the period ahead. let's get more on this story. stephen, thank you for breaking away from pushing out these stories. the wording was pretty hard. would you say it is his style? stephen: it is in line with what we have come to expect from him.
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this, the language is characteristic of his hard-hitting style. manus: he had gone to the nonexecutive directors. did he have a unanimous board vote for antony jenkins to be asked to resign? stephen: a couple of weeks ago they had an off-site meeting. it turned out to be a unanimous decision. there have been rumblings about this since john mcfarland came in because of his reputation. manus: the acquisition levels of antony jenkins were neither -- as one of the analyst said neither aggressive enough in his retrenchment of the investment of the bank or committed to one direction.
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that is interesting. he promised to downsize the investment bank but he never really took a demonstrative position. stephen: this is a bank looking for an identity. people are speculating what will happen. it was never addressed by senior leadership. when the next ceo comes in, investors, shareholders, employees will look for a much more clear statement. manus: if you are an employee you are probably going -- who are we? if you are a producer, and you are looking around and seeing another new ceo, when we just had antony jenkins, we thought we knew what the strategy was. why would you hang around? we have had a lot of change.
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a bit of the theme -- goes into credit squuisse. a lot of change. where are we in this tally? stephen: jenkins is the latest on the top of this pile. he has been trying to get barclays on a stable foot again. they have just paid a settlement. they had that behind them. investors are going to see how they will grow and how they will become profitable. if you are making a 2.7% return on equity, something has to be done. something radical. the chairman said he wants to bring someone in with investment
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banking experience. they could be trying to turn around the unit or it could mean someone perceived to understand the business to right side -- manus: you have been reading too many reports from bank ceos. in greece, the long queues for cash to get your 60 euro limit. some people are trying to use bitcoin as an alternative. getting others to follow suit is challenging. >> we decided to launch the first greek bitcoin in greece.
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the numbers have jumped up the roof. we had 5, 6, 10 clients per day. as we speak, we have 150 to 250 clients per day. we see people using bitcoin as a store of value. it represents an opportunity to offset the risk they might incur -- impose from european central bank. it has been introduced in the greek market three or four weeks ago. it is inside a bookstore in a neighborhood in greece. >> i travel around the world. for one year, using bitcoin. no credit cards, no bank account, just the coin.
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there is no restriction. you connect with your money anytime. since 2012, there is a restaurant in athens that accepts bitcoin. >> from 2012, i have about four or five customers that pay with it. i think people use bitcoin because of the people do not have access to money in the banks. manus: never did i think i would see a greek salad getting paid for by bitcoin. coming up, it is budget day in the u.k..
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we are going to be live in westminster for a preview. stay with us for that. ♪
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manus: welcome back to "the pulse." streaming on your ipad and bloomberg.com. let's look ahead to the rest of the day. and i green -- anna edwards is on the green outside the houses of parliament.
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anna: there is going to be an element of --. if you are going to make unpopular decisions during a parliament, doing it three months after an election strikes people as a good idea. there is a cynical suggestion that people have forgotten by the time you get to the next election. things have been going nicely for the u.k. economy. tax receipts going in the right direction the job creation machine turning into an income generating machine. that is something that will be pleasing for the chancellor. he will continue with austerity. where will the acts fall on welfare reform? that is a big question we are looking out for. the government has boxed
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themselves in on revenue raising measures. manus: we will have full coverage here. osborne's first full tory budget in 20 years. ♪
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announcer: this is "bloomberg surveillance." tom: greece is given an ultimatum as eu leaders prepare for "black scenarios." china's roulette wheel has
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stopped spinning. stocks cannot find a bid, and beijing goes in search of a healthy, sustained stock market. in moments, jenkins is out mcfarland is in. john farrow speaks to the new barclays cost cutter. we are live from our world headquarters in new york. i am tom keene, with vonnie quinn and brendan greeley. it is a double barrel morning of china and greece. brendan: which is the bigger story? it rides on one question. are the stock markets in china still a casino like the last 20 years, or are they indicative of bigger trends in china? tom: the main idea is that china -centric things so far -- japan is down 6% or 7%. cost me and korea

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